resentation mining indaba 2016 - bushveld€¦ · mining indaba 2016 cape town, south africa...

PRESENTATION

Mining Indaba 2016CAPE TOWN, SOUTH AFRICA

Fortune Mojapelo

Chief Executive Officer

08 February 2016

Disclaimer

These presentation slides and any other material provided with these slides (the “Presentation Materials”) do not comprise an admission document, listing particulars or a prospectus relating to Bushveld

Minerals (the “Company”) or any subsidiary of the Company, do not constitute an offer or invitation to purchase or subscribe for any securities of the Company and should not be relied on in connection with a

decision to purchase or subscribe for any such securities. The Presentation Materials and the accompanying verbal presentation do not constitute a recommendation regarding any decision to sell or

purchase securities in the Company.

The Presentation Materials and the accompanying verbal presentation are confidential and the Presentation Materials are being supplied to you solely for your information and may not be reproduced or

distributed to any other person or published, in whole or in part, for any purpose. No reliance may be placed for any purpose whatsoever on the information contained in the Presentation Materials and the

accompanying verbal presentation or the completeness or accuracy of such information. No representation or warranty, express or implied, is given by or on behalf of the Company or its respective

shareholders, directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in the Presentation Materials and the accompanying verbal

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The Presentation Materials contain forward-looking statements, which relate, inter alia, to the Company’s proposed strategy, plans and objectives. Such forward-looking statements involve known and

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forward-looking statements. Accordingly, you should not rely on any forward-looking statements and the Company accepts no obligation to disseminate any updates or revisions to such forward-looking

statements.

The Presentation Materials and their contents are directed only at persons in the United Kingdom who are “qualified investors” within the meaning of section 86(7) of the Financial Services and Markets Act

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Neither this presentation nor any copy of it may be taken or released or distributed or published, directly or indirectly, in the United States of America (the “United States”). The material set out in the

presentation is for information purposes only and is not intended, and shall not be construed, as an offer for securities for sale in the United States or any other jurisdiction.

The securities contemplated in these slides (the “Securities”) have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or with any

securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, any US Person as that term is

defined in Regulation S under the US Securities Act except pursuant to an exemption from or in a transaction not subject to the registration requirements of the applicable securities legislation. The Company

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The Presentation Materials and their contents are confidential and should not unless otherwise agreed in writing by the Company be copied, distributed, published or reproduced (in whole or in part) or

disclosed by recipients to any other person.

2Mining Indaba Presentation, 08 February 2016

• Junior exploration and development company

‒ vanadium

‒ tin

‒ coal

• AIM-listed

• South Africa-focused asset base

• Empowered

About us

3

Share information

Ticker BMN

Number of ordinary shares in issue 486,337,438

Share price* 3.20 p

Number of options in issue Nil

Market capitalisation* £15.6M

Top shareholders Shares held %

Acacia Resources Limited 99,340,000 20.4

Halifax Share Dealing 43,284,974 8.9

Mr Nicholas John Mallett 37,750,000 7.8

Hargreaves Lansdown Asset

Management36,777,121 7.6

Barclays Wealth Management (UK) 25,929,068 5.3

RiverRidge Ltd 25,000,000 5.1

Directors/Management 13,616,667 2.8

Total 281,697,830 57.9

Share price performance: three months


Bushveld structure

4

Developing a

world-class

vanadium platform,

one of the largest outside China

Mokopane Vanadium Project

Brits Vanadium Project

Developing a significant

stand-alone pan-African

portfolio of mineable

tin assets

Mokopane Tin Project

Marble Hall Tin Project

Developing an

integrated thermal

coal mining and IPP

asset in Madagascar

Imaloto Coal Project

VANADIUM

*

GREENHILLSRESOURCES LTD

Mining Indaba Presentation, 08 February 2016

Objectives

*

1. Why Vanadium ?

2. Why Bushveld’s vanadium project ?

3. Why Bushveld’s vanadium platform ?

Mining Indaba Presentation, 08 February 2016 5

Why Vanadium?

• Demand anchored in steel industry with robust growth outlook, on account of:

‒ on-going urbanisation in emerging markets

‒ infrastructure build programmes in developed markets

‒ regulation-driven increasing intensity of use of vanadium in steel production

• Potential demand step-change from energy storage applications

• Concentrated and limited supply growth profile provides support for price

‒ 67% of supply linked to co-product steel producers with strained economics

• low margins, low iron ore price present significant threat to vanadium co-production

‒ High-grade primary vanadium concentrated in South Africa

• Market balance suggests looming deficit

• Cash cost curve points to V price recovery

6

Positive market outlook for vanadium


Why Vanadium? Cont.

Key characteristics of vanadium position it uniquely

in the steel sector:

• Strength - around 0.2% vanadium content

increases steel strength up to 100% and

reduces weight up to 30%.

• Weldability & fabricability

• Corrosion resistance

7

91

43 2

Global vanadium consumption%, 2014

Steel alloys

Other alloys

Chemicals

Other*

Source: Roskill, SAMI, 2009; South Africa Mining Industry Business , Opportunities Handbook, 2013; USGS, 2014

Demand anchored in steel sector where consumption outlook remains positive


0,0960,084

0,06 0,0560,05

0,03

0,00

0,02

0,04

0,06

0,08

0,10

0,12

NorthAmerica

Europe CIS WorldAverage

China India

Why Vanadium? Cont.

Vanadium intensity of use by region

8

Implies

~30,000 tons

additional

demand

Source: TTP Squared; World Steel Association

kgV

/to

n s

tee

l

Steel production drivers remain robust…

Regulation driven shift to higher

strength rebar driving up vanadium

intensity of use in China

% growth in Vanadium consumption in steel between 2006 –

2014, compared with 3.6% growth in steel production+8%

1

2

• 2010 - Code for Design of Concrete

Structures (GBS0010-2010,

• 2011, Update Code for Construction Quality

Acceptance of Concrete Structures

(GB50204 – 2002)

• Large gap in urbanisation between emerging

markets (~40-47%) and developed markets (

~80%)

• Strong correlation between urbanisation and

infrastructure build (thus steel consumption)

• Steel production expected to grow at a

CAGR of 1% through to 2025

Urbanisation in emerging markets


Utility scale energy storage

applications:

• Driving grid efficiency – operational

and capital expenditure

• Peak shaving

• Regulating load frequency

• Balancing PV and wind

intermittency

• Reducing CAPEX for and

losses in transmission and

distribution

Driving grid independence

• Storing electricity from solar

PV for use night

• Lowering system costs for

micro grids and islands

SOURCE: BCG. CitiGroup, Press search

The energy storage market is shifting to

a commercially viable market - 900 MW

of projects are expected to be installed in

2016, growing capacity 100% – iHS,

2016

There will be economic potential for very

large amounts (about 400 GW) of storage

in the EU – Commercialization of Energy in

Europe, EC report, March ‘13

Storage Is the New Solar: Will

Batteries and PV Create an

Unstoppable Hybrid Force? –

Greentechmedia.com, Jan ‘15

California passes 1.3

GW grid energy storage

mandate -

Greentechmedoia.com,

Oct ‘13

Energy storage today

may be on a trajectory

similar to solar

photovoltaic (PV) 7-8

years ago -

0

100

200

300

400

500

BCG, 2011 CitiGroup, 2015

2030 forecasts

Why Vanadium? Cont.

Large demand upside from the growing energy storage market


Source: EIA, iHS, Lux Research, 2013,SA IRP 2010(revised 2013)

Why Vanadium? Cont.

a) Lifespan cycles - able to charge and discharge

repeatedly (>35,000 times) giving it a long (>20 years)

lifespan

b) Capacity for 100% discharge without performance

degradation is unique

c) Capacity to store large quantities of energy and

scalable up into the MW-range

d) Very fast response time (<70ms)

e) Only one battery element - therefore no cross-

contamination – unique among flow batteries

f) 100% of vanadium is reusable upon decommissioning

of the system• VRB employs vanadium ions in the different

oxidation states to store and release chemical

potential energy

Vanadium redox flow batteries have several features that make them ideal for utility scale, stationary energy storage

applications:

10

Vanadium Redox Flow Batteries well placed for significant energy storage market share


• 3.6 MWh in Oxnard, CA (Prudent)

• 8.6 MWh in Ohio

• 1.8, 3.2 and 4.0 MWh systems in

manufacturing for Washington state

• 3.2 MWh system in manufacturing for

Hawaii

Why Vanadium? Cont.

Growing global installations of VRFB systems

NOT EXHAUSTIVE

Source: US Department of Energy Global Energy Storage Database; VRFB OEM company websites; press Mining Indaba Presentation, 08 February 2016 11

Source: US Department of Energy Global Energy Storage Database; VRFB OEM company websites; press

• 5 MWh at Sumimoto HQ (Yokohama)

• 6 MWh in Tomamae

• 60 MWh system contracted for Abira

Why Vanadium? Cont.

NOT EXHAUSTIVE


Sumitomo’s 15MW, 60MWh VRFB system at Hokkaido

Electric Power Co., Inc. (HEPCO)'s Minami-Hayakita

Transformer Substation


• 8 MWh and 1MWh Prudent systems in

Zhangbei

• 10 MWh in Shenyang (operational) and

• 4 MWh in Jinzhau (in manufacturing)

• Many smaller sites

Why Vanadium? Cont.

NOT EXHAUSTIVE



NOT EXHAUSTIVE

• Dozens of 60-100 kWh Imergy and

Cellstrom systems installed

• 2,000 medium-sized Imergy systems

recently ordered by SunEdison

Why Vanadium? Cont.

NOT EXHAUSTIVE



SOURCE: US Department of Energy Global Energy Storage Database; VRFB OEM company websites; press

• 2 sites operational in Germany:

– 1.6 MWh in Pellworm

– 1.2 MWh in Braderup

• 1.7 MWh in manufacturing for Gigha, Scotland

• Italy: 4.0 MWh to Sardinia; 2.0 MWh to Sicily

• Numerous 20-800 kWh systems across Europe

other EU countries

Why Vanadium? Cont.

NOT EXHAUSTIVE



Why Vanadium? Cont.


Bushveld is thus uniquely positioned to address the two biggest barriers to VRFB adoption:

security of vanadium supply and the battery’s cost

• Bushveld has large high grade vanadium

resource capable of supplying required

vanadium – current PFS targeting only 10%

of growing resource

• Bushveld vanadium project one of the

lowest cost vanadium projects

• First quartile cash cost curve position

provides capacity to mitigate security f cost

risk

• The value chain integration in South Africa

will also reduce vanadium and electrolyte

costs and remove currency risk from inputs

Security in the supply of

vanadium

Security of cost of vanadium

Barriers to VRFB adoption Bushveld proposition

1

2

Why Vanadium? Cont.

• Co-product slag accounts as source of most

vanadium feedstock

• But the future lies with primary vanadium ore

feedstock

‒ primary vanadium production economics

are not influenced by steel mill profitability

(unlike co-product slag)

‒ primary vanadium producers, moreover,

have lower capex requirements

• South Africa has >50% contribution to primary

vanadium production, a result of South African’s

large share of high vanadium-in-magnetite

grade deposits

17

64%

24%

12%

Vanadium supply by raw material (2014)

Co-product steel slag

Primary vanadium ore

Secondary

20%

53%

17%

10%

South Africa

China

Russia

Other

Global vanadium production, %, 2014 (100%=86,000MT)

Source: Roskill, 2015; TTP Squared Inc, 2014

Supply is concentrated & constrained


The right commodity – Vanadium Cont.

18Source: Roskill, 2015; Bushveld analysis

Supply is concentrated, with no significant increase in sight

of global production

mainly China &

Russia

64%

V Co-productionHot metal

V-Slag

salt roast

& leach

BOF

Vanadium

recovery

Steel

Smelting

Magnetite

concentrateOre

• Vanadium raw material cost assumed

zero – accounted for in steel making

• Large steel plant capex – barrier to

entry

• Primary economics driver - steel

Primary V production

24%


mainly South Africa

salt roast

& leach

• High vanadium grade required –

barrier of entry

• Lower capex than steel making

• Primary economics driver - vanadium


Why Vanadium? Cont.

19Source: Roskill, 2015; Bushveld analysis

Co-product vanadium supply under significant constraints

V-Slag


mainly China &

Russia

64%

salt roast

& leach

BOF

Vanadium

recoverySmelting

Magnetite

concentrateOre

Hot metal Steel


China

Brazil

Australia

India

CIS

1High operating costs(~2X

operating costs compared with

haematite processing)

• Complex steel plant design

• Inferior Fe grade

• Additional processing steps

2

• Subdued steel market

• Improved margins from

low seabourne iron ore

not available

3

Why Vanadium? Cont.

20Source: Roskill, 2015; Largo; Bushveld analysis

Co-product vanadium supply under significant constraints

V-Slag


mainly China &

Russia

64%

salt roast

& leach

BOFVanadium

recoverySmelting

Magnetite

concentrate

Hot metal Steel

High operating costs(~2X

operating costs compared with

haematite processing)

• Complex steel plant design

• Inferior Fe grade

• Additional processing steps

• Subdued steel market

• Improved margins from

low seabourne iron ore

not available

China

Brazil

Australia

India

CIS

12 3

Three choices for uneconomic vanadium co-product steel plants

1 Switch

2 Curtail

Stop2

• Chengde Steel, substituting some of feedstock raw materials with

seaborne haematite, reducing V production

Example

• Panzhihua Steel – 2 blast furnace put on care & maintenance during

2015 & reducing V production by 15%

• Highveld Steel – stopping production May 2015, followed by

Vanchem

V supply reduction of

~15-

20%


Why Vanadium? Cont.

21Source: Roskill, 2015; TTP Squared Inc, 2014, Bushveld analysis

The disappearing supply is mostly from the lower end of the first quartile of the cost curve…

Co-product slag

Primary ore

SecondaryPotential Supply

reductions


Current V

price

(US$14.65/kg

V or

US$3.7/lb))

• Market balance trajectory points to potential deficit

• Price recovery expected in medium term

• >$6/lb V2O5 price required to stimulate supply (Roskill, 2015)

BVR: project locations

22

Key

Vanadium-bearing

titaniferous magnetite


Witbank

Middelburg

EASTERN LIMB

Burgersfort

Lydenburg

Thabazimbi

WESTERN LIMB

Pilanesburg

Rustenburg

Pretoria

Johannesburg

NORTHERN LIMB



Low-cost curve position

• 298 Mt JORC resource

‒ outcropping

‒ defined on three adjacent and parallel

layers

(MML; MML Hanging Wall)

• 5.5 km strike

• High V2O5 grades

‒ in-situ: 1.48% V2O5

‒ concentrate: ~1.75% V2O5

• Low-cost, established Salt Roast processing

flowsheet with at least three existing

operations using it

23

MML Hanging Wall

MML AB Zone



Pragmatic executable path to production

• Proven Salt Roast process with several

precedents existing in South Africa

• Well-developed mining region with sound

mining supportive infrastructure

• Modest capex requirements

• Deep local talent pools for envisaged

processing route

• Existing brownfields processing

infrastructure in close proximity to

projects

* Based on 2016 Mokopane Vanadium

Project Pre Feasibility Study

24

14

2014

Vametco plant


Economics

• PFS Completed & reported, Jan

2016

• Study undertaken on MML

• Base case RoM of 1Mtpa to produce

9,525 tpa V2O5 flakes product

• Attractive operating costs US$3.28/lb

of V2O5 produced

• Long-term V2O5 flakes price of

US$7.50/lb 98.5% V2O5 (vs current

of ~$3.50/lb)

• Long term ZAR 12.75/US$ exchange

rate used (vs current ZAR16)

• Project benefits from Rand

depreciation: ZAR14.66 exchange

rate => NPV of US$483m, (pre tax

IRR of 28%)


Item Unit Value

Production

Mineral Resource Mt 300

Ore Reserve Mt 28

Life of Mine Years 30

V2O5 Production tpa 9,525

Project Economics

Capital Costs

Initial capital US$ million real 298

Sustaining capital% p.a. (of initial capital

expenditure)1.3

Operating Costs US$ /lb V2O5 flakes 3.28

EBITDA Margin (Avg p.a. steady state

after royalties)

% 52.59

LoM US$ million real 86.2

Pre Tax Post-Tax

NPV @ 7% real US$ million 587 377

NPV @ 9% real US$ million 418 259

IRR real % 25% 20%

Effective Equity return

(assuming 50% Debt : Equity ratio)% 46 37

Payback from commencement of

production ramp upYears 4

• Large open cast resource 298 Mt

over a ~5.5 km strike

• Quality grade (~1.75% in

concentrate)

• 1st quartile cash cost

• Consistent mineralisation

on Bushveld Complex

• PFS based on only

10% of current resource

• Scalable project design

• Proven Salt Roast process

• Well-developed infrastructure

• Modest capex - US$298m

• Deep local talent pools

• Robust economics

• Brownfields processing infrastructure available

• Demand anchored in steel industry

• Potential step change from

energy storage application

• Concentrated and limited

supply growth profile

Bushveld’s vanadium investment proposition

26

VThe right

commodity

Low cost curve

position

ScalabilityPragmatic

executable

path to

production

The right

commodityLow-cost curve

position

ScaleabilityPragmatic

executable

path to

production


BVR, going forward

27

Completion of PFS and BFS

Explore options for early cash flow

Explore options for vanadium demand creation

Consolidate primary vanadium resources

2

1

3

4

Anchor project for Bushveld Vanadium

PFS completed Jan 2016

BFS during 2016, funded through strategic partner

Target initial concentrate product targeting existing vanadium

producers

Pursue brownfield processing plant opportunities

Actively participate in efforts to develop viable additional

vanadium markets to support demand outlook

Identify, secure and develop high grade primary

vanadium opportunities


Bushveld vanadium strategy pillars

Bushveld structure

28

Developing a

world-class

vanadium platform,

one of the largest outside China



Developing a significant

stand-alone pan-African

portfolio of mineable

tin assets

Mokopane Tin Project

Marble Hall Tin Project

Developing an

integrated thermal

coal mining and IPP

asset in Madagascar

Imaloto Coal Project

VANADIUM

*

GREENHILLSRESOURCES LTD


Greenhills Resources


Lemur Resources


Developing an integrated thermal coal mining and IPP asset in Madagascar

• 136 Mt thermal coal

resource (indicated &

measured JORC)

• 1 of 3 main coal plays

in Madagascar

• Scoping study

completed in 2014

• Strategy to secure IPP

licence for intergrated

mine to power

generation play

Thank You!


Contacts and conclusion

32

South Africa Guernsey

Fortune Mojapelo


Tel +27 11 268 6555 Tel: +44 (0)1481 722 584

Fax: +27 11 268 5170 Fax: +27 11 268 5170

Email: [email protected]

Twitter @BushveldMin_Ltd

2nd Floor, Building 3

Illovo Edge Office Park

Cnr Harries & Fricker Road,

Illovo,

Johannesburg, 2116

South Africa

18-20 Le Pollet

St Peter Port

Guernsey

GY1 1WH

Investor Relations Contacts

Russell and Associates Tavistock Communications

Jane Kamau Appiah-Yeboah | James Duncan Jos Simson/Nualla Gallagher

Tel +27 11 880 3924 Tel +44 (0) 207 920 3150

Mobile +44 (0) 7899 870 45/+44 (0) 7715 164 296


Our people

33

Ian Watson

Non-Executive Chairman

Mining engineer; 45 years’ experience; Goldfields South Africa, Northam, Platmin, International Ferro Metals,

Shaft Sinkers

Fortune Mojapelo


B.Sc (Actuarial Science), UCT; mining entrepreneur; strong track record in resource exploration, development in Africa;

co-founder, director, VM Investment Company (Pty) Ltd

Geoff Sproule

Finance Director

Chartered accountant; 40 years’ experience; former partner, Deloitte and Touche South Africa

Anthony Viljoen

Non-Executive Director

Bachelor of Business and Agricultural Economics, University of Natal; post-graduate diploma in finance banking,

investment management; mining entrepreneur, founding shareholder, director, VM Investment Company (Pty) Ltd

Jeremy Friedlander

Non-Executive Director

BA LLB, UCT; former Old Mutual legal advisor; founder of premier property group McCreedy Friedlander; business

development experience in uranium, coal, gold, industrial minerals, gas


0,00%

0,20%

0,40%

0,60%

0,80%

1,00%

1,20%

1,40%

1,60%

1,80%

0 200 400 600 800 1000 1200 1400

Avera

ge in-s

itu g

rade

Total Ore Tonnage (Mt)

Bushveld Vanadium Deposit Peer Comparison

1. Bushveld Vanadium (South

Africa)

2. Maracas (Brazil)

3. Barrambie (Australia)

4. Mustavaara (Finland)

5. Rhovan (South Africa)

6. Mount Peake (Australia)

7. Windimurra (Australia)

8. Balla Balla (Australia)

9. Balama - Syrah

(Moambique)

1a – Potential for Bushveld Vanadium

incl. MML and MML-HW

1b – Potential for Bushveld Vanadium

incl. MML, AB Zone and MML-HW

Total V2O5 contained in resource (area of circle)

Grade – tonnage trendline

2

3

5

4 6

7

1b

1

81a

9

Bushveld vanadium grade in top tier of projects worldwide

Mokopane Vanadium Project – Tier 1 Vanadium Grades

Source: Company annual reports, presentations and market announcementsMining Indaba Presentation, 08 February 2016 33

resentation mining indaba 2016 - bushveld€¦ · mining indaba 2016 cape town, south africa...

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